Whether you’re already in the winner’s circle, on your way to profitability, or still struggling along the way, it is important to have an idea or plan for sustaining and accelerating high-performance results and profitability.

But as expected, at one time or another every company gets off track.

When this happens to successful companies, however, they recognize the problems and get back on track quickly.

Watch for these basic trouble signs when you’re working to achieve and sustain operational excellence:

Hazy understanding of your cost structure, including what drives expense in the business and who the owners are for each cost component on the P&L

No effective RCA/ICA process in place

No plan for automation to increase productivity and reduce costs by eliminating human error

Expenses and overhead that are out of control

Budget owners who can’t factually explain deviation from plan and who don’t proactively take action to realize the plan

What are the solutions for these operational trouble points that will help you accelerate profitability to new levels? Read more

A thorough understanding of a company’s cost structure and the use of continuous process improvement provide the foundation for many business decisions.

Without accurate cost information it’s impossible to set optimal prices, forecast performance, isolate areas that negatively impact cash flow, determine what to stop doing, identify what to automate, and decide how best to manage costs.

It’s also critical to undertand cost drivers in order to grow a profitable business while investing in areas that improve profitability and de-investing in ones that don’t.

Operational Excellence

Operational excellence is how margins are maintained. It is about efficiency, effectiveness, and doing the right things right the first time.

While sales are essential to profitability because they fuel business growth, when sales fall short of the top of the line, or there is pricing pressure, most companies must cut costs to maintain margins and stay afloat.

Unfortunately that often means eliminating people. It’s best to keep a constant eye on costs instead of slashing payroll as a last-ditch effort to make ends meet. Read more

When business is booming it’s easy to get comfortable and rest on our laurels with the status quo.

After all, why not? The status quo is (or was) working wonders.

But if we’re not careful, complacency sneaks in, and before we know it we’re knee deep in crippling habits that wreak havoc from within.

We all have excuses for not changing and you’d better believe companies are full of them! Do any of the following phrases sound familiar?

“We’ve tried that before and it didn’t work.”
“I didn’t make my numbers because . . .”
“Here are all the things that could go wrong.”
“I didn’t know you needed that.”
“I can’t get everything done.”
“It’s not my job. It wasn’t my fault.”
“I wish management would stop changing their minds.”

Excuses signal deeply embedded systemic problems within an organization’s culture. And while you can’t predict or avoid certain hostile economic events, many companies suffer from the same five crippling habits that inhibit change, progress and growth.

Like it or not, this just seems to be our economic reality for the foreseeable future.

Unfortunately, you can’t just hit PAUSE until things improve. You’ve got a business to run!

Your job as a leader is to make the necessary adjustments to plow ahead and succeed.

So whether gas prices go up or down, the housing market improves or consumer optimism increases is all somewhat irrelevant to the small business owner.

While those factors may change the rules of the game, don’t let them alter your ability to manage a thriving business. You have to be willing to make some tough changes and ADAPT, but it doesn’t mean you can’t turn a profit.

Since it does no good to pretend conditions are better than they are, let’s first uncover the harsh realities of doing business and then look at six tangible leadership tactics to put you on the path to profitability.

With the right leadership skills, profitability for your business is not out of reach!

The Cold, Hard Facts

Along with declining employment, we also face increased gas prices, political uncertainty in Washington, as well as overseas, and overall rising costs for doing business. Oh, yes, and let’s not forget the credit situation which remains extremely tight. For small businesses in particular, the impact is draining.

On top of that, it’s simply becoming harder to compete. New businesses, created by smart, unemployed entrepreneurs, are popping up all over offering lower prices. And large companies (once competing up-market) now have moved down to go after smaller opportunities.

But enough doom and gloom, let’s focus on how you can navigate toward higher profitability by following a few simple leadership “Do’s and Don’ts.”